It needs to integrate cross- border clearing and settlement systems across the region to further develop Asian bond markets, a Singapore financial official said in Singapore Monday.

Speaking at the Asia's bond clearing and settlement conference, Ong Chong Tee, deputy managing director of the Monetary Authority of Singapore, pointed out that while considerable improvements have been made within respective countries in clearing and settlement systems, less progress has been seen to integrate these systems across the region.

A theme of the conference was "Does Asia need an Asian ICSD ( International Central Securities Depository)".

Ong's view was that setting up an Asian ICSD in the mould of Euroclear and Clearstream was a more efficient and secure way, compared with linking the national CSDs through a network or linking them to a single hub.

"But it also requires the heaviest upfront investments, and past estimates had put this in the ballpark of 100 million U.S. dollars," he said.

He noted that the current cross-border transactions are not adequate, which are mainly settled through one of three ways: through directly accessing a national CSD, through a local agent, or through a global custodian or ICSD.

A key aspect of a bond market is a well-functioning clearing and settlement system, he stressed, adding that greater harmonization of settlement standards, market practices and risk management frameworks are also needed to improve cross-border settlement.

According to Ong, excluding Japan, Asian bond markets have more than quadrupled in size to 2.8 trillion U.S. dollars over the past decade, but more has to be done to improve the efficiency of clearing and settlement activities in Asia.

Source: Xinhua